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A Pay-Optional Culture

The introduction of the internet to mainstream culture changed content distribution fundamentally. Napster’s notoriety made the public aware that the web could be a tool for sharing audio, video and text files across the world, but slow internet connections prevented P2P sharing from becoming an efficient replacement for purchasing content.

The print industry was hit hard by this change. The online news space became crowded with free options, and print publications –especially local ones– were too slow to adjust. Web advertisements grew in importance as the overall revenue from print ads declined with decreased circulation and subscriptions. A 2015 Pew report graphs the sad state of affairs in terms of annual revenue generated by newspapers both online and in print. Total revenue is down, and online advertisements are not generating enough profit to offset the money lost from print advertisements.

With the debut of iOS 9, users can finally block mobile ads using the default Safari browser. The repercussions are huge for both consumers and content creators, and Apple’s decision to allow third party content blockers will further affect the print industry’s advertising revenue. A recent comScore report finds the “number of mobile-only users now surpasses desktop-only in the U.S.” While this development does not mean that mobile web browsing has surpassed desktop web browsing, the rise in mobile-only users makes the cell market increasingly important for ad-based websites.

Mobile advertisements can be problematic for consumers beyond annoying pop-ups and intrusive banners though. The New York times created an interactive article breaking down the bandwidth uses by 50 different news websites. Data plans in the United States are expensive, and for many smartphone owners, shrinking usage can be crucial for avoiding overage fees. Two of the largest cell providers in the U.S. have charges for going past your limit, easily squeezing extra money out of customers for data overages. It makes sense that Apple would provide a way for iPhone users to customize their browsing experience, but this decision will also have ramifications for ad-based websites with Apple’s 41.3% percent of the U.S. mobile market.

Invasive advertisements and high data prices certainly provide internet users with justification for content blocking, but with the growing acceptance of this practice, website dependent businesses need to reconsider their revenue streams. Paid publications use ads on free web articles to recoup revenue lost from decreased subscriptions. Ad-blocking tools threaten the feasibility of this practice, and the news industry will undoubtedly face further adversity as content blocking grows in popularity.

When faced with the possibility that consumers might no longer pay for content, creative industries must scramble to adapt. Major record labels have navigated this dilemma with increased focus on live events and lucrative 360 deals –essentially modernizing established revenue streams to make up for decreased record sales. The film industry still enjoys considerable profits from the box office, but to make up for the revenue lost on after-market sales, studios have started to embrace streaming. As a subscription based service, streaming companies give customers access to a large library of media for a monthly fee. Depending on their licensing deals, video services like Amazon Prime, Netflix and Hulu have varying catalogs of movies, but music platforms, like Spotify, Tidal, and iTunes, have the majority of commercially available music with little variance between platforms.

Streaming solutions have different consequences for film and music respectively, however. With platforms like Netflix, the film industry still gets to enjoy profits from the box office, which is the primary distribution system for film “sales.” For record labels, however, streaming actually hurts their sales by removing the need for a direct purchase. “Going to a movie” is still very much a popular experience like going to a concert, but for film studios, “going to a movie” is the equivalent of selling a record for labels. Streaming is not a replacement for seeing a movie, but it is a replacement for buying an album.

The record business will have to find a way to cope with this recent change. At the surface, music streaming seems great for everyone. Labels get to combat piracy with a worthwhile, paid service;, consumers can access global music catalogs that would be impossible to acquire; and artists that no one would pay to hear have a chance to capitalize on streaming royalties. Looking towards the future though, the music industry will have to make further changes. For non-major artists, streaming does not provide the same return that album sales do. The music industry is a system built on advances and recoupment, and recouping from fractions of a penny per a stream is not the same as points on a 10 dollar album. Billboard already incorporates streaming into its charts for album sales and the Hot 100, and the future of music depends on new digital strategies.

All of these content issues raise the question: who’s going to pay? Society is moving to a pay-optional culture thanks to the internet, and this is a problem without a clear solution. The Digital Millennium Copyright Act established provisions for copyright holders to protect their intellectual property in the digital world, but these provisions are largely unsuccessful in combatting piracy. Even with take-down notices, music and films remain easily attainable to any internet user who knows how to use Google. Industry lawsuits against consumers mostly result in public backlash for the plaintiff, and bringing every copyright offender to court is neither reasonable nor possible. Nothing is stopping people from pirating, and that makes purchasing media content optional. If the consumer can save money for non-optional purchases by accessing traditionally paid items for free, the consumer is not going to pay for the optional product. Print publications relying on online advertisements will feel the wraith of this pay-optional culture quickly, and the rising adoption of content blocking tools will further complicate the situation.

A culture that believes paying for creative work is voluntary is a dangerous culture to live in. Individuals are quick to complain about current media monopolies, but think what could happen when smaller creatives can no longer sustain themselves with their craft? Many aspiring directors, musicians, and artists work other jobs to make time for creativity. Compensation for commercial endeavors gives these creators the economic ability to focus on new material. If post-internet societies will not compensate artists for non-tangible products, artists will simply become more commercial to maximize ancillary markets. The internet is one of humanity’s greatest inventions, but the effects of such a influential technology must be addressed. The ramifications of a pay-optional culture are huge, and the problem has barely begun.

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2 thoughts on “A Pay-Optional Culture”

You’ve have touched on a incredibly topical and important issue in the world of creative and news media. The internet has created a culture where the average online user expects these types of services to be free, and as you’ve mentioned, that is incredibly dangerous. I’ve discussed this in my own blog, but this is why increasingly, especially in online news, advertisements are shifting to being “native,” or facsimiles of the news content. They don’t appear as traditional advertisements, and provide some form of similar purpose for the reader as the content platform does. Such ads aren’t blocked by ad blockers, and Apple’s move is indicative of a move in the advertising agency toward these types of advertisements.

I was actually discussing a topic relatively similar to this to one of my friends. I brought up how important reliable news was to students and the general public. We rely on online news for accurate information the latest event and use articles for a lot of our research papers. In fact, a couple of my research papers have heavily relied on online sources. Before, we would have to pay for news articles but today we get everything for free. There are some newspapers that have began limited the amount of articles that can be read a month from their website. After you surpass a certain amount, the website asks you to pay. The Wall Street Journal will only let you read only a partial amount of their article and to access the rest you have to pay. Like you mention in your post, with internet the user can just go to another website to get their information. It is concerning because these writers and publications aren’t getting the revenue that they deserve and need to survive. It’s difficult to force the consumer to pay, especially since everything is free on the internet. It is even harder o address music and film since everything is available online. Why pay when you can get it for free? When it comes down to music and film, I think people should pay because it is someone’s livelihood and same goes with newspapers. I think what it will eventually happen is that majority of newspapers will begin to charge for their articles earlier, have more advertisements or do an news email service that is similar to the Skimm. If the music and film industries are serious about their work, I am sure they will start to propose heavier legislation regarding piracy. These industries will find ways to survive in the internet area, they just need to start adjusting faster and trying different strategies.